Property and investment experts are warning prospective purchasers to use specialist property lawyers for their transactions – or risk serious losses.
These can range from inadvertently buying defective properties and cancelled agreements to mounting penalty interest, lost deposits, law suits and thousands of dollars in extra legal fees because non-specialist lawyers lack the expertise to manage increasingly complex transactions.
Among those flagging these concerns is Andrew Nicol, managing partner at property investment firm Opes Partners, who said one of his clients was left $10,000 out of pocket after using a family lawyer for an off-the-plan purchase. In an outcome that Nicol calls “outrageous”, the deal collapsed when the lawyer, unfamiliar with standard real estate contracts, spent longer than usual asking questions and “basically wanted to rewrite the contract”, racking up a bill that was four times higher than it would have been had the client used a specialist property lawyer. ‘
The client was so discouraged that he decided not to buy the property – but still had to stump up the bill.
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This a very perceptive contribution from two very experienced, sensible and competent people. I think from memory at least some Australian states require lawyers to have formal competency accreditations to practice in specific legal fields. Maybe we should do that.
I am interested to know how Joanna Pidgeon would have known a building report was shonky? I am an experienced property lawyer but, not having any experience in the building industry, how am I to advise a client on whether or not they can rely on a building report (unless I know a particular inspector has a poor reputation)?
You might have answered your own question!
Caleb, it appears that Joanna can’t have been acting for the purchaser in the original deal but was instructed afterwards when the problems transpired. Otherwise, she would have told the client that the report contained problems. However, your question raises the general issue as to whether or not a lawyer can be held accountable for losses from a “bad” building report. We’re not builders and there’s no contractual relationship but what about a potential duty of care if a lawyer has experienced poor reports from a particular inspector and didn’t warn the client? Interesting.
I advise clients who can read to read the building report themselves and let me know what issues they want to raise after they have spoken to the inspector – I do not consider that I am qualified to review and advise on building reports, and it’s an expensive exercise to pay me to do so.
Fair enough Caleb but that wasn’t my point.